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Is Sony Afraid Of Cloud Gaming?

Last summer Sony placed a big bet on cloud gaming with its purchase of GaiKai, an online-game streaming service for $380 million.

It was both a bold move and a bow to an inevitable future when video games will be streamed from the cloud to any device, just as Netflix streams movies and television shows today. While cloud gaming is only now starting to be offered to consumers, it will eventually grow big enough to threaten the market for consoles like the PlayStation.

In July Andrew House, president and group CEO of Sony Computer Entertainment, indicated that Sony would not sit around and wait for the console market to shrink. Instead, Sony would embrace cloud gaming. House promised “a world-class, cloud-streaming service that allows users to instantly enjoy a broad array of content ranging from immersive core games with rich graphics to casual content anytime, anywhere on a variety of interconnected devices.”

Last week’s launch of the PlayStation 4 revealed just how far Sony has backed away from that vision.

Visitors play Sony Computer Entertainment's game consoles A model at the Sony booth at the annual Tokyo Game Show in Chiba, suburban Tokyo, on September 20, 2012. (Image credit: AFP/Getty Images via @daylife)

Instead of integrating cloud gaming into the new console, a disruptive move that could have changed the dynamics of the game industry, Sony is using GaiKai’s technology to allow gamers to try a game for free before they buy it and to play a game while it downloads. Other features of the PS4 let a gamer stream a friend’s game and stream games that were made for earlier versions of the console.

These are nice capabilities, but they are not game changers. “It’s hard to see this indecision as anything but corporate cowardice,” Erik Sofge writes in Popular Mechanics.

Sony has reason to be afraid. During the quarter that ended in December, Sony’s gaming-related sales fell 15 percent to about $3 billion thanks to the lower hardware and software sales for the PlayStation 3. This is in line with broader industry declines.

From the standpoint of margins, it’s not in the interest of Sony—or any other major player in the video game industry—to accelerate the move to cloud gaming. If the video game industry follows the movie industry in its transition to digital streaming, profits will take a hit as consumer behavior shifts to renting games from owning them.

But that perspective may be short sighted. According to Gadi Tirosh, a general partner with Jerusalem Venture Partners and a member of the board of directors of Playcast, a cloud gaming pioneer, cloud gaming does not attract the hard-core gamers that rush to buy the latest consoles and console games. “The people we cater to are what we call mid-core gamers,” Tirosh explained. Based on usage patterns, subscribers to Playcast’s gaming channel appear to be families who get more value out spending $10 to $15 a month to play 20 games on a publisher’s back list than they would buying two or three new titles a year for a console that cost between $300 and $400.

Meanwhile, the shift in consumer behavior from renting to owning is likely to be slow. According to BTIG Group, consumer rental of home videos will outpace retail store sales for the first time since 2000 in 2013.

While the shift to cloud gaming will likely occur faster, it won’t happen overnight. Sony’s fear of cloud gaming may be a bigger risk to Sony than the streaming services themselves.

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Sony bought Gaikai and utilized the technology properly. It will be used to stream games to Vita and other devices so you don’t always need the TV. They also said a “subscription” based service is in the works. I personally disagree with the comment about it “not being game changing.” I think it is. They are implementing features that utilize the technology, but are still making retail gaming viable.

Fact of the matter is everyone still wants retail gaming, and cloud gaming doesn’t work like movies do. So it still has a long way to go to be “good enough” to be a core component. I’ve used OnLive and gaikai on fast internet connections and have not once had a streamless experience.

This article seems deaf, blind and mute, hardcore gamers like myself won’t ever give Cloud gaming more than a cursory glance, so we’d buy a PC or a console for dedicated gaming, mid-core gamers as they are termed will, and casuals, so Sony has the service and even removes from their hands the need to buy any special gaming devices, they can plop down for the console and be set for an entire generation of mid-core and casual streaming.

The beauty of this approach is it lets them open the door to hardcore gaming, which is a vibrant and profitable market for Sony, while delivering what they desire. This article seems to utterly miss the point due to perspective, that perspective being that cloud gaming is inevitable, and in my view that perspective is utterly wrong for hardcore gamers like myself who just don’t consider it at all viable for a myriad of reasons.

Actually, hardcore gaming could well remain vibrant and profitable, for precisely the reasons you lay out. Cloud gaming and console gaming aren’t mutually exclusive, they just cater to different audiences.

Sony is not afraid of cloud gaming, but consumers should be. Cloud gaming will suffer greater lag issues that cant be fixed over most internet users NOT having a sunchronous throughput. Im lucky enough to have FiberToTheHome and my UPLAOD is almost the same as my DOWNLOAD (overhead the only real factor between the two).

Wheras cable and DSL do not offer snychronous internet signals… cable has a large distant betwe3en the two and DSL seems to be stuck not going over 1 Mbps.

The real thing Sony, and Sony Computer Entertainment, is afraid of seems to be treating its existing consumer base. Just like Sony’s decision to have only two TV’s make use of a feature there ENTIRE 240hx BRavia line is capable of yet they refuse to let them… Sony Computer Entertainment has done even more dis-repsect to EXISTING customers by not making this unit backwards compatible with ANY content I might even be buying later tonight.

Cloud gaming is not a good idea until more places step their internet transmission game up… it will affect gaming of people like me on stable, fiber conenctions as well. Why Sony seems so afraid to remember its EXISTING consumers are spending a lot of money in good faith and ‘slap us in the face’ with comment of we will have the opportuinty to RE_PURCHASE content we already own… its a real mystery to me, as well as traders.

Check their stock since annoucning their new unit early, as well as its release AND giving out a large number of $10 loyalty rewards… yet it still only falls.

On second thought, maybe this move will force the United States to understadn how lacking its internet is. This would be the only thing Id have to tell Sony thank you for, as it took a mountain of betaing down false data concerning the fiber line I utilise.

If cloud gaming can help the people of the US understand we need to DRASTICALLY improve our internet transmission medium… NOW THAT WOULD BE GREAT!!!

“It was both a bold move and a bow to an inevitable future when video games will be streamed from the cloud to any device, just as Netflix streams movies and television shows today. While cloud gaming is only now starting to be offered to consumers, it will eventually grow big enough to threaten the market for consoles like the PlayStation.” [Citation needed] for this and most of the rest of the article.

I fail to see how a paradigm from the 70s that wes terminal computing laced with a buzz-word is apparently anything but just that. In fact, their use of “cloud gaming” as it is already will make me stay away from the console, since I want nothing to do with that. I want to buy games, not “rent” them to be streamed in low resolution and with horrible input lag.

Um, didn’t Sony only recently acquire Gaikai? Also, their press event was only a teaser, it’s doubtful they told us everything. For example, they neglected to mention a price point for the PS4 or even show us a box. So, it just seems that these kind of . . . I’ll say observations of cowardice are a bit premature IMO. They might be 100% spot-on, but they also may very well be off.

It will be the end of Sony if they make everything cloud gaming. Steam lets you download all of your games and play offline and they’re doing well while OnLive was an utter failure because no one wants to permanently rent a game. PS4 won’t allow users to bring over any games they purchased on PSN so how do you expect the customers to trust cloud gaming?